SEC Chairman Urges Lawmakers to Delay Changes

Marketwatch.com reported last week that Mary Schapiro, the Chairman of the Securities and Exchange Commission (“SEC”), sent a letter to Representative Barney Frank, Democrat from Massachusetts, asking that lawmakers hold off on making changes to the new whistleblower program until there is proof that it is causing problems.  The letter came as the House Financial Services Panel prepared to vote on a bill introduced by Rep. Michael Grimm (R-NY), cynically named the “Whistleblower Improvement Act,” which would require potential whistleblowers to first report any alleged wrongdoing within their company before reporting it to a government agency.

Schapiro argued that the bill was likely to have a chilling effect on potential whistleblowers, reducing the number of whistleblowers that would come forward.  Schapiro suggested that inasmuch as many whistleblowers fear retaliation, forcing them to report their concerns internally would undermine any potential for anonymity undermine the enforcement objectives of the new SEC whistleblower program.